Updated version 2 - With surging profit margins, Valero sets a quarterly profit record, establishing a strong benchmark for U.S. refining companies.

Supplemented detailed information about the results in paragraph 6, chart

Reuters October 22 - Refiner Valero Energy (VLO.N) reported record quarterly profits beating Wall Street expectations on Thursday, as Middle East conflicts triggered supply disruptions that sent third-quarter refining margins soaring.

As the company kicking off the refiner earnings season, its shares rose 2.6% in pre-market trading.

Since the outbreak of the Iran war, the U.S. refining sector has been making huge profits, with benchmark margins for transforming crude oil into transportation fuels more than doubling.

The "3-2-1 crack spread" (CL321-1=R), which measures U.S. refining profit margins, jumped more than 150% from the previous year during July to September.

Valero Energy stated that this quarter its per-barrel refining margin almost quadrupled to $39.24, and the refining business segment's adjusted operating profit soared over 400% to $8.8 billion compared to the same period last year.

"This quarter, our refineries operated near all-time high capacity utilization rates, providing a reliable supply for critical transportation fuels," said CEO Lane Riggs.

As the world's largest crude oil producer and the second largest refiner behind China, the U.S. increased exports of crude oil, gasoline, diesel and jet fuel to record highs earlier this year following supply disruptions caused by Middle East conflicts.

U.S. refineries are now operating at 95% to 100% capacity, with many companies postponing planned maintenance to profit from high energy prices. Valero, along with peers Phillips 66 (PSX.N) and Marathon Petroleum (MPC.N), all reported the highest quarterly net profits since 2022 in the second quarter.

Valero added that it has completed the FCC optimization project at the St. Charles refinery, boosting output capacity for products including alkylates and gasoline, further strengthening its ability to supply transportation fuels to the market.

The Texas-based company reportedadjusted earnings per share of $23.90, marking its second consecutive quarter of record profits. According to LSEG compiled data, analysts had previously expected Valero's earnings per share to be $21.07.

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